What does this mean for apartments? It means that we are going back to the basics when it comes to analyzing these properties and investors are . . .

Capital assets and the preferential tax rate on gains from the sale of qualified long-term property dates back to the Revenue Act of 1921. That groundbreaking legislation was the first time that the income tax code provided for a lower tax rate on gain recognized upon the sale of capital assets held for more than 2 years by individual taxpayers.

Since then, the marginal tax rates on long term capital gains has ranged from our current low of 15% (5% for lower income individual taxpayers) to as high as 33.8%. The holding period meanwhile has similarly moved around from as low as 6 months to as high as 2 years. Currently, the holding period for long term capital gains treatment is more than 1 . . .

The Subprime Meltdown Reduced the Condiut & Capital Markets

Subprime mortgage loans were first introduced in the 1990’s creating new opportunities for credit-constrained borrowers to obtain home ownership. This opened the door for millions of consumers to own homes and access equity that otherwise would have been declined under conventional underwriting guidelines. The subprime mortgage market did not get overheated in the 1990’s primarily due to the lack of an established secondary market facilitating the sale of subprime mortgages. Financial institutions originating subprime mortgages were primarily restricted to their own available capital.

There were other factors that contributed to the out of control . . .

If the preliminary preparation of your 2007 federal income tax return indicates that you are likely going to have to pay more taxes than you expected, Perkins & Co. / BDO Seidman, LLP may be able to help. A cost segregation analysis of your existing real estate holdings could significantly increase your 2007 federal tax depreciation thus reducing your current year tax burden.

HFO has arranged for investors to receive a complimentary review of their real estate holdings, including an estimate of the potential depreciation increase. The review and analysis can be completed for a timely tax filing (April 15, 2008) and certainly can be accomplished with ease if you plan to extend your 2007 return. If interested, please contact Aaron Douglas at . . .

It is an interesting time in the like kind exchange world. Enacted in the early 1920’s the technique was virtually ignored for decades. They came into vogue after the Starker case and really exploded once Treasury Regulations were proposed in the late 1980’s. But for all that history there has been very little activity resulting in rulings and cases.

In the current tax environment the IRS and Congress are beginning to scrutinize like kind exchanges more than ever. What follows is a brief synopsis of pending and proposed changes relative to exchanges. To stay abreast of these issues Taxpayers are urged to consult with their tax and legal advisors before . . .